Why invest in Spain?
2015 saw a turning point for the Spanish property market. House prices were sitting at a seven-year low, but an upturn in employment and the economy beginning to stabilise meant that Spain was attracting a high level of overseas buyers. With a 17% increase in buying activity from June 2014 to June 2015, foreign property investors were cashing in on the low house prices and snapping up luxury properties across the Mediterranean and Spain’s major tourist cities. This was the start of a renewed confidence in the Spanish property market that has continued into 2016.
With the coast and popular Spanish cities being the most obvious places to buy a rental property, how do you narrow down your exact choice of location?
Overseas investment experts Europa Finance and Estates have been investing in Spain for years and give the following advice… “Picking an upcoming, popular location is essential for a successful rental business. Your property should be in a desirable area with great facilities catering for families, couples etc. Take time to speak to other investors who already own properties and also tourists who frequently visit other countries.”
Getting overseas finance or mortgages
With savvy international investors recognising the huge potential the Spanish property market is presenting for holiday rentals, how easy is it to find the right investment property? More importantly, is it possible to take advantage of the upturn in this property market without having a high level of cash to invest?
The simple answer is yes.
Obtaining a mortgage or finance to buy in an established property market such as Spain might be easier than you think. All the main UK high street banks have an overseas mortgage service, but you would need to research which countries they buy in as this can differ with each lender. Whilst this service is great for those without the ability to buy in just cash, deposits required are typically much higher than a UK mortgage with Spanish property being around 30-40% of the property’s value, then you also need to factor in 12-15% for fees and taxes.
Another challenge you might face is that European lenders won’t generally offer loans on a buy-to-let or interest only basis. They tend to base the amount of money you can borrow on your actual earnings, rather than any rent you may receive on the property. With the obvious restrictions this puts in place for investors (alongside the higher deposits which your funds might not stretch to) you may want to consider the alternative of gaining investment finance from an independent company (such as Europa Finance and Estates, who specialise in providing finance for the Spanish property market).
Nisar Malik, founded of Europa Estates explains in more detail… “Our Spanish investment properties are available with 110% financing which widens their availability to all investors, especially as there is no deposit to put down. We co-ordinate everything, from the initial conversation to the completion which gives an additional level of support to any investor buying overseas for the first time”.
The best investment strategy for the Spanish property market.
With Spain being such a popular country for tourists, holiday rentals are the obvious choice of investment property. Most holidays abroad are taken on a weekly basis so can be charged at a higher rate than say monthly rentals in the UK. However, acquiring the right property at the best price is essential to maximising your returns.
Malik goes on to explain the investment strategy they have successfully used to buy property in Spain… “Buying distressed or repossessed property is a fantastic way of getting a top quality property at 20, 30 or even 40% less than market value. All experienced property investors will tell you that a large amount of money is made when you purchase it at a reduced rate, not when you sell it.”
If buying investment property in Spain is a strategy you are seriously considering, take advantage of our dedicated Buying Overseas Property forum where you can chat to like-minded investors as well as our resident overseas experts Europa Estates and Finance.
You can also contact Europa Estates and Finance directly through their website: www.europaestates.co.uk